Funeral plans and the ‘peace of mind’ delusion

It may be that the media are beginning to wake up to the inadequacies of pay-now-die-later funeral plans. The Times has a piece today which, chances are, you won’t be able to read online because you haven’t got a key to the paywall. So I’ll summarise. 

It highlights third-party costs that funeral plans generally do not cover — costs which cluster under the umbrella known formerly as ‘disbursements’ until the Dismal Trade cottoned on to the fact that no one outside the Trade uses the word ‘disbursements’; it may sound like a good and impressive word but is effectively Double Dutch. Undertakers: please stop using it. From now on, talk only of third-party costs. 

Funeral plan providers actually make it pretty clear what costs are covered and what costs aren’t, so there’s little excuse for surprises when the undertaker’s account flops through the letterbox — or, rather, there is no excuse for the person who has died not to have made provision for these costs in another way – by popping a grand into an Isa, for example. Buyers seem to be blinded by the peace-of-mind message common to all providers. We are disappointed to note that the Funeral Planning Services Liberty plan claims on its home page: 

With a Liberty funeral plan you can both choose your own funeral arrangements for your own peace of mind, and freeze Funeral Directors’ costs at today’s prices, saving your family from having to make difficult emotional and financial decisions in the future, and only on the Details page comes clean and makes you aware of: Option to contribute towards third party costs such as crematorium, doctors & clergy fees

Less justifiable is the sales trick used to stampede people into buying a plan. Yes, the cost of dying is rising by around 7 per cent per year. But most of this increase is not in undertakers’ costs, it is in the fees payable to third parties (once known as disbursements). 

The Times article has a swipe at Age UK, the ‘charity’ which, as we have had cause to deplore often, here, *flogs Dignity plans to trusting elderly folk. The Times correctly observes that these Age UK plans “tie families in to using an approved funeral director rather than a local, often cheaper, independent undertaker.” The ‘approved’ funeral director may well be based some distance from the person who has died. 

The Times piece correctly notes that funeral plans are not regulated by the Financial Conduct Authority. 

The article concludes with a case study that’ll make your lip curl: 

Ros Rhodes, 70, was shocked to receive a bill for more than £1,000 for her mother’s funeral, as she believed all costs would be covered by an Age UK funeral plan. Her 89-year-old mother had spent almost £3,000 on the plan 18 months previously.

The extra costs were even more perplexing because the undertaker’s account showed that he had been paid only £2,169 from Age UK — £571 less than her mother had paid the charity.

She says: “I have telephoned and written to Age UK to try and find why there was such a difference in the money paid in and the money paid out. I have been fobbed off with trust funds, expenses, inflation and other such terms that are of no real answer.”

After Age UK was contacted by Times Money it sent Mrs Rhodes a cheque for £750 as a goodwill gesture. The charity said that there had been a mix up with the bill and Mrs Rhodes should not have been charged so much, and also that she should not have seen the breakdown of the funeral director’s expenses. But Ros says had she not seen the breakdown, she would have never have queried the bill.

*The Age UK Guaranteed Funeral Plan is offered by Advance Planning Limited, a company incorporated in England and owned by Dignity Pre Arrangement Limited (a subsidiary of Dignity plc). Registered office: Advance Planning Limited, 4 King Edwards Court, King Edwards Square, Sutton Coldfield, West Midlands B73 6AP. Registered in England, no. 3292336. — Source